Washington, Jul.22, stock market trading .- I've said many times over the past weeks, months and even years, that financial markets in this environment are completetly driven by policymakers.

The Fed and the ECB have given us clear guidance within this crisis era, that they will do anything and everything to prevent more shocks. They will spend money they have. They will promise money they don't have. They've set a precedent (albeit a dangerous one).

Why does it work? Because everyone is troubled, and everyone is vulnerable. In normal times, money would punish the troubled and move toward stability and sanity. But these aren't normal times.

That's why all global policymakers (central banks, governments) have proven that they are willing to stand behind each other when needed. China steps up and buys Greek debt when Greece is imploding. The Fed steps up and supplies the world with unlimited dollar liquidity when European banks are on the verge of collapse. These are a few examples of many.

It's important to understand, it's not that they want to help, necessarily. It's because they have had to.

The stool cannot stand if one leg falls. That remains the case, six years into the crisis.

Now, we've had plenty of bad interpretations on the future path of Fed policy over the course of this crisis-era. The events of the past few months have been just more of the same. The Fed has tried to tell us openly what they are thinking. Still, no one likes to listen.

Oddly enough, perhaps the biggest mistake people are making currently is paying too much attention to the Fed. And they are paying too little attention to the rest of the world.

Whether or not the Fed scales back its OPEN-ENDED QE program is not that important. What's important to understand is that the rest of the world is, and has been, spiraling lower again -- for the better part of the past year.

And, while people have become accustom to watching the Fed for guidance, the guidance on global monetary policy juice is coming from Japan, not the Fed. And more is about to come from the euro zone and the UK.

So those that are fearing that less Fed stimulus means less fuel for economies and asset prices, wake-up. The BOJ has unleashed one of the biggest (if not the biggest) global stimulus programs we've seen in this crisis-era. And its in the very early stages. And the BOE and ECB will likely get as aggressive as they have been to respond to the ultra-weak economic conditions in Europe.

This creates an environment that is highly positive for global stocks. And it creates an environment that is highly positive for the dollar as we get incremental divergence in the policy paths of the Fed relative to just about everyone else.

Now, let's take a look at the charts ...

EURUSD

Let’s take a step back and look at the long term chart of the euro. In this monthly chart below, you can see the trend remains lower. In fact, we’ve been in a five year downtrend in the euro, following the marking of its all-time highs versus the dollar in 2008.

Looking back to the 2008 high, we have a series of lower highs along the way. And we remain in the bottom third of this 42 big-figure range of the past five years. The 200 month moving average in the euro, comes in right around 1.20, which also happens to be right around the mid-point of the all time range in the euro (dating back its 1999 inception).

So despite all of the threats to the existence of the euro, all of which remain valid, the euro continues to trade in expensive territory, relative to its historical range. So the trend remains lower, and its worth noting, the moving averages on the weekly are bearish.

Now, narrowing in a bit on some of the more recent behavior of the euro,

In this weekly chart, we can see that the 0.618 retracement of the move down from 1.4939 to 1.2041 came in at 1.3832.

This most recent retracement leg fell just shy of that 0.618. Of course, this retracement leg was driven by verbal intervention by the ECB a year ago, when Draghi said they would do “anything to save the euro.”

The high of the move marked the head of a bearish head and shoulders (see the chart below). After forming a right shoulder, the first attempt to break the neckline failed. It’s very common to see head and shoulders patterns elicit volatility, and that was the case. It failed the neckline and bounced aggressively.

But as you can see in the chart above, we still have a very compelling bearish head and shoulders structure. The neckline now comes in at 1.2820 – the break of which would project a move down to 1.18, which happens to match the crisis-driven lows in the euro (i.e. the low of the past five years).

So based on the analysis of the longer term charts, things continue to look bearish for the euro. Now, let’s take a closer look…

In the chart above, we see the sharp move lower from mid June, driven by the reaction to the Fed’s most recent meeting. The market was looking for taper talk, they got it, and they bought dollars on it. Of course, cutting back on QE would push the Fed in a direction opposite from the rest of the world, which is dollar positive. However, a portion of this move was erased a few weeks later after the Fed ensured everyone that they would remain in aggressive easing mode, whether they scaled back QE or not.

Nonetheless, given that the other major central banks are initiating MORE easing, the relative policy implications (which are THE drivers for markets right now) are firmly dollar positive – taper or no taper. This creates a very good area to sell euros against to look for an eventual break of 1.2750 on the downside. Expect very good selling against 1.3205 (the high of the Bernanke driven spike). The downside trade would only be invalidated if we get a break of 1.3325, the line from the May 2011 highs that describes this downtrend.

On the downside, the 1.2750 area is huge. Of course, 1.2743 was the low marked on April 3rd when Draghi was speaking, and stopped to make this point: He said people have underestimated how important the euro is the euro zone. That turned the euro for some time. And that level has held nicely a few times since, over the past three months. Expect the Nov 2012 low of 1.2659 to go quickly if 1.2743 gets taken out.

GBPUSD

So now we have Carney well in place at the BOE and things are playing out according to expectations. This has been an event people have been waiting on for the better part of 2013.

In his first meeting as BOE chief, he didn’t disappoint. He laid the groundwork for taking a more Fed-like approach to policy, which means telling people they will be ultra-easing for an extended period of time (or some language to that effect), and ramping up policy to deal with the lack of growth in the UK. Among that policy, expect them to set thresholds, as the Fed has done on unemployment and inflation.

The BOE meets again on Aug 1, but the real news should come on Aug 7 after they submit an inflation report to the UK Treasury. With that, it’s expected that they will get the greenlight to get more aggressive, despite the fact that inflation remains higher than their target of 2%.

So what does it mean? Sell cable on rallies.

For those of you that have read my Big Picture piece for some time, you’ll recall this huge four year line the chart below, that we were looking to break.

That level gave way back in February and led to another visit under 1.50. And on this retracement from March through May, we were looking for this line to hold -- which it did.

With policy changes coming in August, look for this key 1.48 level to test and go. This opens up a move down to 1.42 in the pound. Look to sell strength and sell weakness.

USDJPY

As I said earlier, the BOJ policy shift made back in April is huge! This weekend we get more confirmation that Abe's policies to end deflation in Japan will roll on -- his LDP party gained a majority in parliament. As I laid out in my piece, Japan: The Trade of the Decade, expect a much weaker yen and much higher Japanese stocks. The BOJ has told us explicitly, they are factoring in a persistently lower yen and persistently higher stocks.

In the chart below, you can see we've gotten a 38.2% retracement of this strong uptrend in USDJPY, that was initiated by Kuroda's comments (prior to becoming BOJ gov) that he thought Japan should target aggressive inflation. Strong trends have shallow retracements. That's the case here.

Yields

Don’t get so excited about yields. Each time the Fed has done QE yields have risen!

In my last piece, I showed the below chart on U.S. 10 year yields and made this comment: “you can see that QE has pushed 10-year yields higher in each case. In general, with the Fed telling investors that they will push rates lower, it has created the opposite effect. It has driven people out of bonds (i.e. encouraged them to sell) which pushes bond yields UP.”

The below chart is from my June 17 piece …

Yields have continued to extend into this, running into this trendline (the falling red line).

The next chart is current and shows the most recent climb in yields – the line represents just closing prices.

You can see in this chart above, we’ve had an aggressive rise in yields since the June Fed meeting. But we have run into technical resistance here. And there is little fundamental reason to expect yields to continue a march higher anytime soon. Back in my January 13 Big Picture piece, I argued that, given the improvements in the economy and given the Fed had promised to ward off any future shocks via its open ended QE, that we had probably seen the low in yields and would likely find a sustained new range above 2%. I said, “That’s probably good enough to move U.S. yields into another trading zone, perhaps 2%-3%, instead of 1.5%-2%. That likely means, the all-time low of yields is IN. And that creates the risk the move in yields could be quick, as it opens up the floodgates of Treasury sellers”

Where from here? We likely stay in this 2-3% range. Japanese institutions are now plowing money into U.S. stocks and U.S. Treasuries escaping the yen devaluation policies in Japan. That should keep a cap on yields. Inflation remains uncomfortably lower for the Fed. That’s all a formula for a halt in yields.

Japanese stocks

We've had a nice retracement in Japanese stocks -- a second chance for people to get involved. With the monopoly Abe has in parliament now, expect another leg in this Japan trade to kick in. In this chart below, you can see this key trendline that held the first run up at 16k. That 16k level in the Nikkei now becomes the big break point.

A break above 16k and the next levels of interest become 19.2 (the 38.2% retracement of the massive 24-year range in the Nikkei).

The bigger target above is 23k -- which we could see in the next twelve months if the BOJ is executing their plan effectively.

Bogle wrote a letter to the editor. Here's an excerpt: Citing Benjamin Graham as the first "hedged fund" operator is an especially unfortunate example. "The trick," Mr. Rice writes, was Graham's "clever way to make money . . . whether it [the market] continued to rise, or started to fall." ...

One of my pet peeves is the way that insiders -- whether corporate CEOs, hedge fund managers, or elected politicos -- capture compensation (or credit) for normal cyclical gains they had little or nothing to do with.

This is the approach favored by the Crony Capitalists — those people pretending to be free market participants, and who merely pretend to be creating value. They are taking credit for structural successes that would have occurred with or without them. What they are actually doing is capturing value, not creating it — and then transferring it from its true owners (shareholders/investors) to themselves.

This is wrong; it is legalized theft.

If you want to see a good example of how CEOs transfer shareholder wealth to themselves, a good place to start is Roger Lowenstein’s 2004 book, Origins of the Crash: The Great Bubble and Its Undoing. The section on CEO compensation is astounding; these guys were essentially getting wildly overcompensated for being CEOs during a bull market. The prime example was the CEO of Heinz, who gave himself (with the tacit approval of his Board ofCrony Directors) a $90 million bonus. And this was back in the early 1990s, when $90 million was real money.

Earlier this year, Goldman Sachs Asset Management announced that it would launch a new mutual fund that — apparently — will bring the joy of hedge fund investing to the masses. For as little as $1,000, the Multi-Manager Alternatives Fund (GMAMX) allows mom-and-pop investors to put their life savings into some of Wall Street’s riskiest and most expensive products. This “fund of funds” will, according to its prospectus, let investors gain exposure to the trading strategies of hedge funds...

Big public pension funds reaped strong returns from their hedge fund portfolios in 2012, with most of them handily surpassing their own benchmarks and well-used industry indexes. The hedge fund portfolios, for the most part, achieved close to what chief investment officers wanted, despite a 1,500-basis-point difference between the best and worst performers, according toPensions & Investments' analysis of the returns of 19 hedge fund portfolios from 17 U.S. public retirement plans with aggregate hedge fund assets of $60.7 billion.

Something must be in the water over at 399 Park Avenue, where Daniel Loeb's hedge fund Third Point is headquartered. His Third Point Ultra fund has already gained 12.42 percent this year through the 13th of March, according to data from HSBC’s Private Bank.

The portfolio added 3.3 percent alone between March 1 and March 13. By comparison, hedge funds have returned about 4 percent year-to-date, according to HSBC.

The roughly $1.7 billion Ultra portfolio is a levered version of the firm’s flagship Offshore fund, which manages about $5.7 billion and has gained 8.5 percent over the same period. ...

After taking a cursory look at the recent 13-Fs filed by hedge funds, it became apparent that hedge funds were scaling back their exposures to gold. George Soros was among the big names that unloaded his position. According to Goldman Sachs' new Hedge Fund Trend Monitor report, hedge funds in aggregate scaled back big time.

Despite low turnover, hedge funds notably reduced holdings of underperforming long-time favorites Apple and gold while raising allocations to rallying Financials. For the first time in three years AAPL was not the top stock in our VIP list, instead ranking as the third most frequent top-10 holding... Continue to read.

10 Publicly Traded Hedge Funds That Pay a DividendInvesting in publicly traded hedge funds is a great way for an investor to see returns through capital appreciation and dividend payments in the financial sector. When it comes to investing, many think of the process as a choice between growth and value stocks; you’re either taking on risk in search of capital appreciation, or you’re seeking out stable sources of current income through dividend payments. Luckily, Wall Street has many investment options and investors don’t have to make a clear-cut choice between capital gains and dividends. There are a lot of misunderstandings about dividend stocks out there; make sure you’re investing for the right reasons, check out 5 Common Misconceptions About Dividend Investing.... Continue.

Hedge Funds Love These 3 Outperforming Semiconductor Stocks ...Do you like to follow the buying trends of smart money investors? We ran a screen to find semiconductor stocks currently in favor by hedge fund managers. We began by screening the semiconductor industry for stocks that are rallying above their 20-day, 50-day, and 200-day moving averages, indicating that these stocks have strong upward momentum.We then screened for those with bullish sentiment from institutional investors, with significant net institutional purchases over the last quarter representing at least 5% of share float.... Continue.

10 REITs Absolutely Adored By Hedge FundsAfter identifying the most popular stocks among hedge funds (see our full Top 10 here) according to their third-quarter 13F filings, we have decided to break down the top 10 REIT stocks that hedge funds love. The REIT industry, notably specialized REITs in hospitality and healthcare, should see positive growth from a rise in job growth and expansion due to freeing up of the credit markets. Our list includes 400 hedge funds and prominent investors that are required by the SEC to disclose their public equity holdings quarterly. In descending order, we have outlined the most-loved REIT stocks based on the aggregate number of funds owning each....Continue.

Apple Stock Hit by Panic Selling: 'Someone Yelled Fire'(Yahoo) Forget the "fiscal cliff." The real panic on Wall Street is over Apple's stock. Nearly every mutual and hedge fund has piled into Apple Inc. (NASDAQ:AAPL) during its spectacular rise over the past few years. Now, these same funds are scrambling for the exits as the stock goes through an equally spectacular decline. Apple plunged to a six-month low Thursday as funds rushed to take profits on the stock before it's too late. Shares are now off 25 percent since late September-shortly after the iPhone 5 launch and a month before the iPad Mini introduction. The stock, once up 74 percent on the year, is still up 30 percent for 2012. That's why Wall Street is getting out while it can....

Billionaire George Soros’s Latest Stock Picks (InsiderMonkey) George Soros is best known for the fortune he made shorting the British pound in 1992, but he currently invests a considerable amount of money in equities and so is required to report many of his long positions in 13F filings. We’ve gone through the 13F for the third quarter of the year and compared Soros’s holdings at the end of September to three months earlier. Read on for our impression of his moves and compare them to what he's bought and sold before. AIG. American International Group, Inc. (NYSE::AIG) became Soros’s largest 13F equity holding during the third quarter with a position of over 15 million shares being reported in the filing. A number of value investors have been getting into the insurer over the course of the year, and at a P/B ratio of 0.5 it certainly looks cheap compared to the book value of its equity. We also like its earnings multiples- it trades at 9 times forward earnings estimates- and revenue was up strongly in the third quarter compared to the same period in 2011. Fellow billionaire Dan Loeb had initiated a position during the second quarter of 2012 and we think that it still looks like a good buy for investors....

Duke Energy CEO Jim Rogers still facing issues as tough year nears an end (BizJournals) In late 2011, Jim Rogers seemed almost golden. He was about to close his last big merger deal. He was poised to take a corporate chairmanship tailored to his penchants for energy policy and reshaping the utility-business model. He was ready to bask in the spotlight of a national convention he’d helped bring to Charlotte. But by late 2012, it’s evident things have not gone so well. “It has been a year of challenges,” the Duke Energy Corp. chief executive concedes. “Nothing in life is perfect.” Dan Fogel, associate director of the Wake Forest University Business School’s Center for Energy, ...

Argo unveils emerging markets hedge fund (InvestmentWeek) Argo Group has launched an emerging markets hedge fund investing in bonds and currencies from a universe of over 40 emerging market countries. The Argo Local Markets fund aims to hold between 20 and 30 positions and has been launched with an initial $7m of seed capital. It will offer investors weekly liquidity and has a mandate to take on moderate leverage. Argo chief executive Kyriakos Rialas said: "The case for investing in emerging markets is compelling....

Argentina's President Is Making Great Political Theater Out Of Paul Singer Seizing The Country's Naval Ship(BusinessInsider) Cristina Fernandez de Kirchner is turning her feud with hedge fund manager Paul Singer into a political rallying cry in Argentina. The President has refused to pay Singer's firm Elliott Management the $1.3 billion it owes the fund after it defaulted in 2010. de Kirchner says it's because Singer was given multiple chances (in 2005 and 2010) to restructure, like other hedge funds did, and take a haircut to recoup at least a portion of their losses. Singer, needless to say, did not. Instead, he decided to capture one of Argentina's naval vessels as collateral, and got Ghana to give him an order to detain the ARA Libertad last month....

Tom Steyer New InvestmentsFARALLON CAPITAL Hedge fund billionaire into politics (DailyDemocrat) Hedge-fund billionaire Tom Steyer staked millions of his own money to take on big oil and then to close a corporate-tax loophole costing California $1billion a year -- and won both times. Ever heard of him? Don't worry, you will. With his latest behind-the-scenes win at the polls as the man who stared down big business by standing up for Proposition 39, this Stanford MBA and top Obama fundraiser has become an out-of-nowhere big-time political player in California. So what does Tom Steyer want now? "I am an enormous lover of California and to the extent that I see something wrong, I will be involved in trying to fix it," Steyer, 55, said Monday. "What form that takes, I don't have a fixed idea."...

Hedge Fund News: David Tepper Value ...Billionaire David Tepper's Latest Stock Picks (InsiderMonkey) Appaloosa Management is a value hedge fund managed by billionaire David Tepper (whose name might sound familiar to any recent attendees of Carnegie Mellon’s Tepper School of Business). The fund has an estimated $16 billion under management. We have gone through Appaloosa’s 13F for the third quarter of 2012 and picked out... Continue to read.

This Hedge Fund Returned Nearly 25% Last Quarter Artis Capital Management was a top performing hedge fund during the third quarter. Coming in with the fourth best Q3 performance, the fund’s picks had a weighted average return of 25.5% during the first half of the year, and returned 24.6% for the third quarter, boosting the fund’s year to date performance to 56.4%. Artis Capital was founded in 2001 and is a San Francisco-based hedge fund with a focus on public technology companies.... Read more.

More ETFs Play Hedge Fund CopycatWhat if you could emulate the actions of the most successful hedge fund managers for a fraction of what they cost? Two ETFs that debuted this summer are trying to do that by using public filings to replicate their portfolios. And a third, which launched early this month, promises to add another hedge fund dimension to ETF copycats by adopting what its sponsor calls the only true market-neutral strategy in the lot. Researchers have been trying to emulate hedge fund strategies since the 1990s ... Read more

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BMW and Pininfarina are two of the most tradition-swathed names in the motoring world. Each is a byword for cutting-edge technology, style, dynamics and aesthetics. With the BMW Pininfarina Gran Lusso Coupé, the two

time-honoured companies are unveiling the outcome of their first collaboration at the Concorso d’Eleganza Villa d’Este 2013. The BMW Pininfarina Gran Lusso Coupé is a one-off and represents the exclusive interpretation of a luxurious BMW Coupé as seen through the eyes of Pininfarina.

The precious metals have been weak again in May with gold falling 4.4% despite this weeks’ recovery. Silver is down 7% and platinum by 2.6%. Palladium has recovered from recent weakness and those who accumulated on weakness are set for the best month since November after it surged 6.6% in May.

Weakness in gold and silver is leading to robust demand internationally as store of value buyers accumulate gold and silver on this dip. This is particularly the case in Asia where premiums remain robust and supply demand imbalances remain. ...

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The future of work is the work itself, not where and when the work takes place. Workplace flexibility programs are already catching on and will soon become standardized as more millennials enter the workplace. All workers, not just millennials,want freedom and flexibility and some are even quitting their jobs to becoming freelancers in order to gain that freedom. oDesk.com has 3.3 million registered freelancers, and Intuit predicts that by 2020, 40% of Americans will be freelancers. When it comes to working from home, 13.4 million people (9.4% of all American workers) work from home at least one day per week compared to just 9.2 million in 1997 according to one Census Bureau.

Russia is funding research into powering its airplanes with solar energy. The airline industry is being hurt by high fuel prices, and solar-powered planes would not only be cheaper but also would remove a major source of carbon pollution that contributes to global warming.

Investors have picked over the ETF universe in search of any kind of yield in an extremely low-rate market for bonds. As a result, ETFs tracking many traditional high-yield sectors have been bid up to expensive levels, but there are still places investors can go for income without paying nosebleed valuations. “Unfortunately, valuations [for dividends, high-yield junk bonds, MLPs, and REITs] are approaching sky high levels in many instances as more investors fall in love with these products ... Continue.

U.S. manufacturing growth picked up in March as new orders increased and hiring quickened, closing out the best quarter for the sector in two years, a survey showed on Monday. Financial data firm Markit said its U.S. Manufacturing Purchasing Managers Index rose to 54.6 last month from 54.3 in February. A reading above 50 indicates expansion. Output increased, though the rate of growth slipped to 56.6 from 57.3 in February...